RIS318384 bijlage Mission-Label-Information-note-for-cities-participating-in-the-Mission

The Mission Label – information for cities participating in the Mission The Mission Label of the Climate-Neutral and Smart Cities Mission is awarded to cities whose Climate City Contract (CCC) is endorsed by the Mission Manager. This endorsement is given considering the results of the review of the CCC by the Commission’s Cities Mission Secretariat and Joint Research Centre, by external financial experts with support of the European Investment Bank (EIB), and after consultation of the Commission’s internal Mission Owners Group and the Mission Board for ClimateNeutral and Smart Cities. The Label acknowledges the quality of the CCC process carried out by the city. Cities can use it as a sign of confidence in their climate neutrality plans, when they interact with their stakeholders and citizens and when they approach public and private funders. There is no direct financial reward attached to it, but the Label is intended to help facilitate access to EU, national, and regional funding and financing sources, in particular to private investment. The Label also offers an opportunity for Member States, regions and other public actors to support highly visible activities on climate neutrality to help carry forward their overall efforts to meet European Green Deal targets by 2030 and beyond.

It should however be noted that the awarding of the label does not constitute a Commission endorsement of specific projects or measures included in the CCC and does not prejudge future decisions on support to projects included in the CCC from the EU budget, nor financing from the EIB. This note provides an overview of different sources of funding and finance that could be of interest to Mission cities. In parallel, the Commission is also informing public and private funders of the existence of CCCs, their maturity, the review process and its follow-up. This is intended to facilitate the task of labelled cities when approaching funders and allows funders to consider specific conditions for labelled cities in their respective support schemes. This also applies to national and regional authorities that administer large EU funds, for example the Recovery and Resilience Facility (RRF) and Cohesion funds.

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1. EU funding European public funding will only ever be able to cover a fraction of the costs of cities’ climate transformations. Under Horizon Europe, EUR 360 million have been allocated in the first three years of the Mission. In addition to hands-on support for each selected city via the Mission Platform (the NetZeroCities project with its City Advisors and City Support Groups), every participating city is able to participate in a pilot programme and a connected twinning programme (up to EUR 1.5 million of support). Cities can also participate in thematic R&I calls. Following the evaluation of Missions in summer 2023, Horizon Europe funding for Missions will continue with the same order of magnitude for the period of 2024-2027. The Commission’s Cities Mission Secretariat is working across departments and institutions to generate synergies with other EU programmes and policies. These synergies are not yet linked to the Mission Label because, at the time of writing the relevant call texts, no Mission Labels had been awarded yet. The synergies are linked to participation in the Mission. Examples include: -

Connecting Europe Facility (CEF) for transport: All relevant CEF transport calls for projects on the TEN-T network that opened in September 2022 and later (with a total budget of more than EUR 5 billion) include participation in the Cities Mission as an award criterion under “priority and urgency”. Following the September 2022 call, two projects from Mission cities were selected (in Bordeaux and Milan). In the 2023 call, the same reference was kept: https://ec.europa.eu/info/funding-tenders/opportunities/docs/2021-2027/cef/wpcall/2023/call-fiche_cef-t-2023-sustmobgen_en.pdf It will also be kept in future calls.

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LIFE programme - Climate Action: The calls for Strategic Integrated Projects (SIPs) include a topic on “Urban climate change mitigation and/or adaptation SIPs”, which focuses on the implementation of urban or community-based action plans pioneering the transition to climate-neutral and/or climate resilient society, including climate-neutral cities plans and actions. The 2022 and 2023 SIP Climate Action calls encouraged the applicants that were submitting a proposal for an “urban SIP” to develop synergies with the Cities Mission. While only one of the three projects selected in 2022 addressed the urban SIP topic and did not make reference to the Mission, the 2023 call is ongoing with full proposal submissions expected by March 2024. The LIFE SIP Climate Action call opening in 2024 will again include a reference to synergies with the Cities Mission.

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European Urban Initiative: As regards Innovative Actions, references to the Cities Mission and the Adaptation Mission were included in the call topic "greening cities" published in May 2023 (overall budget EUR 120 million from the European Regional Development Fund for all three topics of this call). Besides innovative actions, synergies with the Cities Mission are also sought with other activities supported by the initiative such as capacity building, knowledge sharing and capitalisation for evidence-based policy making. New innovative solutions developed by the Cities Mission could be promoted among relevant stakeholders through means offered by the European Urban Initiative, thus contributing to the uptake of such solutions in investments supported by Cohesion Policy.

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Digital Europe Programme: References to the objectives of the Cities Mission are being included in relevant calls of the Digital Europe Work Programme. For example: The Commission recently selected projects supporting, through cascading grants, pilots combining data in the area of sustainable mobility, extreme weather events, energy and zero pollution. 2

The action should establish links to the Cities and Adaptation to Climate Change Missions which would provide opportunities to experiment and upscale the use of the smart cities data space with local partners (EUR 18 million). -

European Innovation Council (EIC): The new EIC BAS programme on Innovation Procurement foresees increased opportunities for cities’ climate transformations. Given that procurement is the main means to modernise public services, the SPIN4EIC – Strategic Innovation Procurement programme of the EIC offers inter alia the opportunity to cities to receive assistance to carry out Innovation Procurements to develop through R&D or acquire breakthrough solutions to tackle their climate challenges. In addition, the EIC is launching a new action (expected to start in 2024) that will offer the opportunity to cities to de-risk the procurement of innovative solutions to address their needs in the climate transformation process through free of cost pilot tests, offered to them by the EIC top-notch innovators. A call to increase the procurement of innovative solutions by public and private buyers with specific reference to the Cities Mission was opened in June 2023 (up to EUR 3 million). It is currently under evaluation.

For Mission cities in associated countries, some of these funding sources are not available. However, there are different dedicated sources for such countries that the Commission’s Cities Mission Secretariat is activating in cooperation with colleagues in the department for neighbourhood relations (DG NEAR), such as the TAIEX instrument. The Cities Mission Secretariat is pursuing synergies with other programmes for the benefit of all Mission cities further and is at the same time working on specific benefits for cities that have been awarded the Mission Label. These could include: -

Support for labelled cities from the EIB: The Cities Mission Secretariat is working with the EIB on targeted support for labelled cities to help develop their ideas outlined in the sectors in the Investment Plan of the CCC into bankable projects. In particular, via a planned EUR 18 million top-up of EIB advisory activities under the InvestEU Advisory Hub1, labelled cities will be able to access additional support along the project lifecycle in areas such as energy efficient buildings and sustainable mobility (via the EIB’s European Local Energy Assistance (ELENA) service), technical studies, energy audits, financial feasibility, business plans, financial structuring (incl. PPPs, financial instruments and project bundling), advice on the preparation of documentation for submission to financial institutions, legal advice, procurement support, project management and implementation support.

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A dedicated window for labelled cities under the Smart Cities Marketplace2 (SCM): the Explore-Shape-Deal Matchmaking process3, established in 2018, has so far matched approximately 130 projects with a total private investment of nearly EUR 670 million, covered by the SCM’s Investor Network4. With the agreement of the labelled city, its CCC including the Investment Plan will be forwarded to the SCM’s Matchmaking experts for a fast-track

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Planned for the Horizon Europe Work Programme 2024, pending formal approval of Member States and adoption in March 2024. 2 https://smart-cities-marketplace.ec.europa.eu 3 https://smart-cities-marketplace.ec.europa.eu/matchmaking 4 https://smart-cities-marketplace.ec.europa.eu/matchmaking/investor-network

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assessment of the maturity of the plan’s components5, without the city needing to go through the usual application procedure. Cities will then be contacted by the Marketplace team for next steps, in order to define the terms of the support required and, whenever applicable, be quickly matched with suitable investors.

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Social Climate Fund: The new Social Climate Fund will provide dedicated financial support to Member States to help vulnerable citizens and micro-enterprises with investments in energy efficiency measures such as home insulation, heat pumps, solar panels, and electric mobility. It will start operating in 2026, before the entry into force of the new ETS for transport and building fuels, and will be financed by €65 billion from the EU budget, plus 25% co-financing by Member States. The Member States are to prepare Social Climate Plans following a public consultation with local and regional authorities, representatives of economic and social partners, relevant civil society organisations, youth organisations and other stakeholders. These plans will include the measures and investments proposed by the Member States to address the social impacts of the new carbon pricing on the most vulnerable groups and will also justify how national geographic specificities are taken into account in the Plans. In that context the needs expressed by cities, such as those reflected in their CCCs (Cities Mission) or SECAPs (Covenant of Mayors) could be taken into account in the Social Climate Plans of the Member States.

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The Intelligent Cities Challenge (ICC): The new phase of ICC supports European cities to accelerate the green and digital transition of their local economies, through Local Green Deals. In this context, ICC supports Mission Cities to implement specific actions of their CCCs, through Local Green Deals (LGDs) with local industry, SMEs and private investors. LGDs help enact engagement of the local businesses to achieve the city’s net zero objectives.

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European Green Capital / Leaf Awards: The award of the Mission Label will be taken into account in the assessment of cities’ applications, starting with applications for the year 2025 (opening soon).

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In cooperation with NetZeroCities and national networks and on the basis of the specific needs expressed in the CCCs that have been awarded a Mission Label, the Commission will also explore possibilities to promote joint procurement of existing technical solutions.

Climate City Contracts, including the investment plans, submitted to the Smart Cities Marketplace are assessed against their Project Maturity Level (PML), helping the Matchmakers to better understand the investment potential and risk of the submitted actions: - PML 1 – Potential project identified (project or technology apparently suitable for intervention) - PML 2 – Project potential quantified (via audit, study, benchmarking, etc.) - PML 3 – Project investment estimated and suitable business models identified - PML 4 – Technical project and business case developed - PML 5 – Investment-Ready (Business case and tender model confirmed) - PML 6 – Investment offer or tendering requirements created (ready to sign or launch tender)

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2. National and regional level funding In many countries, funding for Mission cities has been mobilised at national level, for example: •

Under Cohesion Policy 2021-2027 programmes implemented in the shared management under responsibility of Member States, more than EUR 110 billion is planned for investments aimed at supporting green transition, thus also contributing to the objectives of the Cities Mission. A large share of funding will be invested in cities, based on the strategic choices of Member States, regions and cities depending on the respective national arrangements. The Commission will continue to promote the Cities Mission and in particular labelled cities in Monitoring Committees of relevant cohesion programmes. Labelled cities with mature and high quality investment plans will naturally be in a strong position to succeed in calls organised by Managing Authorities for investments focused on green and low-carbon transitioning towards a net zero carbon economy and resilient Europe and sustainable urban development.

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In Greece, a Green Fund was set up with a national commitment of EUR 10 million for their six Mission cities, and an additional EUR 500 000 for the preparation of the Climate City Contracts.

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In Spain, the national government funds a national Mission platform (starting with a seed fund of EUR 800 000) to offer support to cities, including capacity building, financial support and development of multi-city programmes to jointly overcome the main barriers that cities are facing in implementing their CCCs. It also committed to reinforced funding for comprehensive actions towards climate neutrality and to co-governance in European funds.

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In Austria, 10 cities were granted EUR 2 million each in a public-public partnership in order to allow the cities to recruit additional staff working on the climate transition.

The Commission’s Cities Mission Secretariat is in contact with national and regional governments to create dedicated opportunities for cities that have been awarded the Mission Label. As the first Mission Labels were awarded only very recently, such efforts will need some more time, but there are already first examples: •

Spain is working on developing fast tracks in calls, fiscal incentives, and a national mission label to attract private capital to invest in the portfolio of projects needed to implement the cities’ CCCs.

Another avenue being explored with national governments are national programmes offering support to other countries, in bilateral agreements or benefitting groups of countries, such as the EEA/Norway grants for widening countries.

3. Private finance In terms of facilitating access to funding and finance, key addressees of the Mission Label are private investors. The Investment Plan of the CCC is intended to provide a common language and frame of reference for cities and investors, and the Label is intended to increase investors’ confidence in the cities’ plans. Apart from direct contacts with representatives of financial institutions, philanthropies and investors – notably via specialist members of the Cities Mission Board – the Mission Platform is in the process of establishing a “Capital Hub”, which should be launched in 2024 and should bring cities together 5

with the financial community and should help match needs and available capital. This Capital Hub will work hand in hand with the financial advisors who are part of NetZeroCities’ City Support Groups and with the EIB’s advisory services like JASPERS, ELENA and the InvestEU Advisory Hub. The Capital Hub is intended as a tool that is specifically targeted to cater for the needs of cities that have received a Mission Label.

4. Regulatory support With a CCC endorsed by the Mission Manager, the labelled city is in a better position to approach national and regional governments with its needs in terms of regulatory support (e.g. to grant exemptions from national rules, to shorten approval processes). This is notably the case if several labelled cities from the same country can raise their needs jointly. Eventually, all endorsed CCCs collectively will allow the Commission and Member States to assess overall needs across Europe and to better target future spending programmes to achieve strategic objectives at regional and local levels.

5. Visibility The Mission Label is a unique means for cities to get visibility for their work, both locally and at other governance levels. The award of the first 10 Mission Labels has drawn attention to the labelled cities in the media as well as at conferences and meetings at the highest political levels. The Commission’s Cities Mission Secretariat will carry on using all opportunities for such added visibility and encourages cities and Member States to do the same.

6. Possibilities to highlight the contribution of city partners The Mission Label also offers the possibility for cities to highlight the contributions of public and private partners that have made commitments in the CCC and have co-signed the CCC. City partners may not use the Mission Label without qualification (for example, they may not claim that they have been awarded the Label or use the Label visual in their general advertising), but they can refer to their contributions to a CCC for example when applying for calls for funding or when promoting their activities. Cities can support this for example in letters of endorsement, explaining the contribution that the partner has made to the CCC.

January 2024

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